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How to Prepare for Tax Season

February 2020

By: Chris Risenmay, CFP®

Welcome to the 2020 tax-filing season! Have you already started the tax-filing process or are you avoiding it? Many people are doing the latter, and it’s no surprise why since each taxpayer spends about 12.5 hours preparing for and filing taxes, (*1) not to mention the added tax-preparation costs. But since the tax-filing season is here and you have to face it eventually, the sooner you get everything in order, the sooner you can shake off that stress and spend your time doing what you love instead. Here are some ways to prepare for tax season so it goes as smoothly as possible.

Gather Your Important Information & Tax Documents

You’ve probably been receiving various tax documents in the mail for the past month or so and now is the time to organize that pile sitting on your counter. You may have documents such as:

    1. Form W-2: These are issued by employers and show your wages and tax withholdings. They are supposed to be mailed by January 31.

    2. Form 1099-MISC: These report income you have received as an independent contractor or freelancer. You should receive one from each person or company that pays you.

    3. Form 1099-INT: This form will show any interest you have earned.

    4. Form 1099-R: This form reports income received from annuities, IRAs, or pensions.

    5. Form 1099-DIV: Any dividend income you earn is reported on this form.

    6. Form 1099-B or 1099-S: You will receive these if you have any income from the sale of property or stock.

    7. Form 1098: You will get this from your mortgage company reporting the interest that you paid.

    8. Form 1098-T: This reports payments of qualified tuition and expenses.

    9. Form 1095-A or 1095-C: These forms report your healthcare coverage for the year and your premium tax credit, if applicable.

   10. Schedule K-1 (Form 1065, Form 1120S, or Form 1041): This reports income for a partner, a shareholder, or an income beneficiary of an estate or trust. The Schedule K-1 normal deadline can be as late as April 15th.

If you want your tax-filing experience to be painless, you’ll also want to make sure that you have all of your and your dependents’ personal information available, such as Social Security numbers and dates of birth. Also, if you itemize your deductions, start gathering your receipts for healthcare expenses, charitable contributions, and records of your taxes and interest paid.

Review Last Year’s Return

Looking over your 2018 tax return is a good way to get a sense of what you will need to file your 2019 tax return. Make sure you have statements for all the accounts and investments you included on last year’s return. This will also remind you of any special deductions or credits that you may be eligible for. If you’re working with a new tax professional this year, providing them with a copy of your 2018 return will make your 2019 return quicker and easier for them.

Consider Possible Changes

While it’s helpful to look over last year’s return, you also need to take into consideration any changes that have occurred over the past year. Did you add another child to your family? Did one of your children start college? Did you start taking withdrawals from a retirement account? All of these changes need to be reflected on your tax return but won’t show up on prior returns.

More than personal changes, there may be changes to federal or state tax law that you should be aware of. The Tax Cuts and Jobs Act tax reform bill of 2017 are still being implemented and the new SECURE Act could also affect your 2019 tax situation. A knowledgeable financial professional can help you understand any tax law changes and how they affect you.

Make A Plan for The Future

While it’s important to get your 2019 tax return filed properly, it’s just as important to look at the bigger picture of taxes in general. Are you optimizing all of the tools available to you to limit your tax liability? Are there steps that you could take now to minimize future taxes? Do you have a plan for your tax refund that will further your overall financial goals?

Taxes are complicated, to put it lightly, so it helps to work with a professional who understands them if you want to maximize the opportunities available. An experienced financial advisor can help you with tax planning in light of your overall goals and financial plan.

If you want to be proactive about tax planning, our team at Cypress Wealth Services would love to help you experience confidence in every aspect of your financial plan. Call our office today at 866.888.6563 to schedule an appointment and get started!


About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.